UMC reports lowest profit in three years

The company holds a cautiously optimistic view about this year, an official said, adding that an increase in wafer shipments is predicted

United Microelectronics Corp (UMC, 聯電) yesterday reported its weakest quarterly net profit in three years, which it attributed to a prolonged inventory correction.

However, the company said it expects wafer shipments to grow about 3 percent this quarter as inventories in the communications and computer segments drop.

Net profit plunged 35.4 percent to NT$10.46 billion (US$321.6 million) in the first quarter, compared with NT$16.18 billion a year earlier, making it the worst quarterly performance since the first quarter of 2021.

Net profit declined 20.8 percent from NT$13.2 billion in the previous quarter.

Earnings per share dropped to NT$0.84 last quarter, from NT$1.31 a year ago and NT$1.06 a quarter earlier.

“For this quarter, we expect an increase in wafer shipments as the inventory situation in the computing, consumer and communication segments improves,” UMC copresident Jason Wang (王石) told investors.

The firm expects 28-nanometer chip shipments to pick up this quarter, from a dip last quarter caused by weak smartphone demand, and the utilization rate of 28-nanometer technology — the biggest revenue contributor — to stay relatively healthy for the remainder of this year due to rising demand for

OLED driver ICs and Wi-Fi chips, Wang said.

The Hsinchu-based contract chipmaker said its average selling price would hold firm in the coming quarters and gross margin is expected to hover at about 30 percent this year.

Factory utilization would stay at about 65 percent this quarter, Wang said.

The company lacks sufficient information to predict when its factory utilization would climb to 70 percent, as customers have adopted a more conservative approach to building inventory, he added.

Overall, UMC holds a cautiously optimistic view about this year and expects to outperform the global foundry industry, Wang said.

The company maintains its forecast that the world semiconductor industry would grow about 5 percent this year, driven mainly by artificial intelligence (AI) servers, he added.

UMC has a relatively small exposure to advanced chips running on AI models, Wang said.

The company focuses more on developing chips used on edge-AI devices handling data transmission and power management, he said.

However, the company offers silicone interposers used in advanced packaging technology in AI servers, which helped boost the company’s specialty technology to account for 57 percent of its total revenue last quarter, he added.

UMC is sticking to its projected capital spending for this year of US$3.3 billion, with a major portion of the budget going on its Singapore fab, he said.

The company has rescheduled the volume production of its Singapore fab to January 2026, from April next year, given current market dynamics and customer alignment, Wang said.

The Singapore fab is primarily to produce auto chips, he added.